All Tangled Up: Asia’s Noodle Bowl and the TPP

Claire Johnson

2 years ago

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Chances are, you’ve probably heard of the Trans-Pacific Partnership Agreement (TPP). Recently it seems that everyone within Australian politics, from the Prime Minister to members of the Greens, have had something to say on the matter. Politics aside, however, the TPP is undoubtedly one of the most significant Free Trade Agreements (FTA) to be negotiated in recent years. Encompassing 25.5% of world trade, 12 signatories and 8 years of negotiations, the signing of the TPP is no small feat. What has received little attention, however, is the impact the TPP will have upon the trade regime in the Asia-Pacific. While this may seem a fairly boring and somewhat obscure topic, it is in fact important as it affects the costs associated with trading throughout the region.

To be blunt, trade agreements are not exactly scarce in the Asia-Pacific region. Indeed, it seems almost every state, from Japan to Brunei, has a Preferential Trade Agreement (PTA). While the proliferation of PTAs sounds all nice and good in theory (if you happen to be a liberal economist), they have also been contributing to a regional trade architecture that is increasingly complex and hard to navigate. Most of the existing trade agreements in the region are bilateral and vary markedly in terms of their rules on tariffs, non-tariff barriers and administrative procedures. This so-called “noodle bowl” of PTAs has a distortionary effect on trade and also makes it harder for companies to manage PTA compliance. As a consequence, the proliferation of PTAs has, ironically, managed to increase the transaction costs of trading in the region.

This is where the TPP comes in. Multilateral in character and broad in its scope, one of the main attractions of the TPP, at least for academics, is that it brings with it the potential to address the noodle bowl problem by establishing a set of jointly agreed trading rules. Most importantly, the TPP promises to be a “living agreement”, to be expanded and refined by member states over time. Coupled with the fact that the agreement also contains provisions for the accession of new member states, the TPP has substantial potential to further multilateralise and simplify the Asia-Pacific’s trade architecture.

The issue, of course, is that the TPP is yet to be ratified by any of its member states. Moreover, while there has been interest in accession by non-TPP states, including South Korea and Indonesia, the TPP’s broad scope in terms of rules and tariff reductions may make developing states in the region reluctant to accede, especially given the milder terms of the Regional Comprehensive Economic Partnership currently in negotiation. If the TPP is successfully ratified and attracts new member states, then it could well affect a transformation in the Asia-Pacific’s free-trade regime. Failing that, however, the TPP may unfortunately be slated to be just another large noodle in an already overcrowded bowl.

Claire Johnson is a fourth-year Political Science and International Relations student at UWA who dreams that she will wake up one day to find someone else has written her thesis for her.